Public Problem: Private Markets Grapple With Tech IPOs

The move by Internet titans like Groupon, Zynga and potentially Facebook to go public threatens to cool a hot industry: the secondary market for trading in shares of private companies.

Private exchanges have benefited as start-up employees and accredited investors have aimed to capitalize on growth before companies hit the public markets, and trading shares of private companies has surged in recent years. The value of all private-share transactions was $4.6 billion in 2010, up from $2.4 billion in 2009, according to New...